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tv   Bloomberg Markets Middle East  Bloomberg  September 22, 2016 12:00am-1:01am EDT

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yousef: markets extend the post-fed gains and interest rates steady, scaled-back for increases this year. angie: shipping surges on emergency fundingm but receivership court says the company may be on rescue. we are told they must find a sustainable way of sustaining the oil price. angie: and turkey announces a range of measures to get
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consumer spending a much-needed shot in the arm. yousef: 8 a.m. in the emirates. i'm yousef them l.l. bean. angie: and i am angie lau. welcome to bloomberg markets: middle east. we are watching asian stocks rally for a sixth day, really all about the fed. yousef: it is all about the fed, angie. we had quite a bit of interesting commentary, interesting data as well, especially the scale of this. the highest at three cents from october 2014. take a look at this chart. this can be easily pulled up on your bloomberg. you are all set. you can see how different said officials are positioning themselves. why like to point out here is an officials expect a quarter point rate increase this year. three policymakers still expect no change in 2016. that is your far left there.
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and officials scaled back expectations or i can 2017 and beyond, at two, down from the median of three. some interesting movements there arguably, continuing to be seen throughout the day's program. and he, what are you watching? angie: absolutely watching that. japanj here, markets in with the rest of the region, let's do a quick state of play. live trading for 20 minutes now, joining the broad rally. rallying for a sixth day, really seeing things take off as regional bonds and the currency strengthen after central banks, and putting the federal reserve really signaled that it will remain, accommodating. is over in australia, there some climbing, 8/10 of 1%, after they said we are not all inflation. interesting comments, yousef. yousef: angie, middle east just
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under two hours away from the opening of the emirates are s markets. dubai done a quarter of 1% contract down. and the saudi national holiday today, is closed again with energy being the best-performing sector there, of course keeping an eye on egypt, as will be down 1.4% amid weaker volume. let us check in on the first word headline. yousef, new rba governor has been a first public statement since taking over, singh he sees himself as the voice of cautious optimism. he told a parliamentary committee that he expects inflation to remain low for some time, but will pick up as the labor market strengthen. he said it is in the public interest to deliver inflation at 3%, and insisted policymakers are not inflation nutters.
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oul,ping is on a tear in se after korean air agreed to provide emergency funds. carrier is offering $50 million a meeting, and the government estimates and meets half a billion to cover unpaid fuel and cargo handling cost. the receivership court says hanjin may be on rescue. apple stepping up the auto sector, the company looking for a stake in sports car maker maclaren and electric motorbike startups in san francisco. we are told apple is likened to make a large investment in mclaren, rather than buy it outright. and holding the number of international self driving patents. apple said it like to release an autonomous car by 2020. after all the debates about the reserve, theyl left rates unchanged. it signaled a height still likely before the end of the year. the fed's said straight hold since the key rate was raised to
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have percent in december, the biggest sign since 2014. three of 12 policymakers 40 48 water of percent. janet yellen downplayed the decision. janet: we are trying to understand the difficult issues. there is less disagreement among participants in the committee, than you might think listening to speeches and commentary. >> global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. angie? angie: thanks. how have markets reacted to the fed announcement? let go to shery ahn with the latest. shery: pretty positively. you see all markets in the red right now. taiwan gaining and losing. this morning. but still unchanged at the moment. we are seeing the cost index,
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the best weekly gains since july, up 1%. the central 100 gaining for a third consecutive day come up a 10th of 1%. new zealand stocks also gaining. rates,t moving on keeping the rate unchanged at 2%. but it does suggest further rate hikes to come. but we do have a central bank decision as well out of the philippines, which is more than 1%. but remember, foreign investors have pulled money out for 20 consecutive days, and a top official this morning are saying that the country is horrible to capital outflows. shanghai,ch break in both markets in hong kong gaining. all markets reacting to the fed decision to delay a rate hike. and today, we have the look at fx markets. what we are seeing is a broad u.s. dollar weakness. we are seeing the dollar has been weakening throughout the year, and we are headed now for the worst annual performance in
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four years. losing 2/10 of 1% as we see the fed position now on those rate hike. so, how is that affecting currency in asia? well, not surprisingly, on the back of dollar weakness we are seeing the south korean yuan strengthening 1.4%. it is outperforming regional peers, gaining the most since june. same story for indonesia. the strongest level in two weeks. same thing for the malaysian ringgit, gaining the most in almost a month or more than a month, slightly more than a month. trend inis bucking the asia? take a look at the chinese offshore yuan, rising for the first time in four days. but we are now seeing resuming losses, at 6.6780. yousef? yousef: let's bring in our first guest.
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great to have you on the program again. signals from the fed morning towards a shallower hiking cycle. what struck you as most significant? guest: the decision was more or less expected. no hike, and the rhetoric leaves the option open for one more hike before year-end, possibly in december. this is how we enter the meeting. this is how we left the meeting. so, pretty much everything is unchanged. now, our view has always been for more than a year now that this hiking cycle is going to be very shallow. we were not expecting hikes this year. we still do not expect a hyperion although the fed is keejn to leave the option open, the labor market is strong. but it is also slowing. there is no real inflation pressure, inflation expectations are low. despite the fact the
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fed is leaving the options open for one more interest rate increase, i don't think they will actually deliver it by year end. yousef: what extent has politics benefactor in pushing this to december? guests: i don't think it played any factor. i think if you look at the economics, there is no pressing need for a hike. most central banks around the easing, andtually if the fed is the only one that goes the opposite direction and hikes, you should expect some pressures on the dollar to appreciate, which would decelerate the economy even further. and the u.s. economy, although it is healthy, not really growing that fast to begin with. so, the room to maneuver, the cushion from growth is not really there. we are growing just about 1%. it is not that high. fori think the room to hike the fed is limited. as much as they would like to increase interest rates, it would not be that easy. yousef: u.s. elections coming up later in the year.
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marious sticking around your lettuce good angie. angie: oil continues to gain after u.s. inventories dropped to a seven-month low. brent crude per barrel, we have our energy reporter here. ok, opec meeting less than a week away. where do we stand? >> at the moment, it is looking to talk about how to stabilize prices but if you look at a, is quite stable at the moment. wti alone averaging $45 a barrel. withwe saw in the u.s. those supplies declining is a pretty good sign for the market. it is one of the markets that forcaused quite a headache opec members. also, declining a third week. datahe next most important point for the oil market is that opec meeting coming up next week. and whether they can agree on anything tangible. yousef: the saudi's met our
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iran, what are you expecting from the talks? diplomacy is in full swing at the moment. saudi arabia is meeting with iran and vienna, going through preparation. i think if you look at some of the commentary coming out most recently, the expectations, are low for any sort of agreement whether it is a freeze or a cut. the algerian energy minister probably put it best, sing the market needs to see one million barrels a day. whether it can be agreed on that front is the big question. if history is any guide, this year the freeze, they cannot agree on anything. when they would acquire the quotas being in place, so opec members cannot even agree on those either. low, and ifectation anything comes above that it will be a bonus for the market. yousef: thanks. ben, our energy reporter. of course, you can get more on that and the rest of the day's news. tailor-made for the middle east,
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you will find in-depth reports, and market data for the region. plus you can watch all of our interviews and special content only available online. coal: later in the show, gives lighting china's fire as the biggest producer raises output. we are going to take a look at what is driving the move. coming up next markets react to the fed's latest decision beard we are going to be gauging the feeling in the middle east. this is bloomberg. ♪
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bill: it strikes me as very, very sad if you want to use that term. >> they are obviously not in much of a rush. let us be clear. the behavior demonstrates that. i think there must be some angst
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or they would not be changing the language so much for the end of the year. they are looking at all the other measures of inflation that have been taking up. they said the target was down below 2%, 1.6%. but the core cpi, cleveland fed said all moving above 2%. they face a risk of mina version. >> we're only a few tenths of a target below the fed's inflation. just imagine if paul vogel walks in the room, back in 1987 and said we are within 40 basis points of our target, inflation rate. he was 10% from the target. inflation rate, the fed is almost there. yousef: some comments from money managers about the fed's latest policy decision. let us continue that conversation with standard chartered global chief. happens at the end
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of 2016? let us assume they do hike once, how much room to they leave themselves to navigate any volatility in the future? marios: i think it is very limited. the economy has been slowing down in 2016. i think the acceleration in economic activity will likely continue in 2017 as well. the fed wants to hike, normalization, i do not like this term because what was normal before in terms of interest rates is not normal anymore. lower interest rates is the new normal, some normalization does not really apply. i think they will not have much room to hike further next year. one more point on inflation, we are approaching the inflation target. many people argue that the fed needs to hike because of that. let us not forget that the fed has been missing its inflation target for eight years. running. we are still below the inflation
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target, so i do not share this rush of hiking the cousin are approaching this inflation target. we have missed it for eight years. we are still below it. i think the risk of hiking too you areo soon when growing at 1.5% at best, significant downside risk to the economy. japan's 10 year government bond yield stood positive for the first time since the boj said it would are just that said the deal from a near zero. it is the first time the central bank has targeted the yield curve in decades in an attempt to spark reflation. aiming tonor kuroda overshoot the 2% inflation target. as they listen right now. central bankson, can only control short-term interest rates. however, after the lehman brothers shock, central banks bojuding the fed, ecb, and
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have succeeded in lowering longer yields through debt purchasing. i think we can control the longer yield curve well enough. angie: it was a bit of a surprise, and it was definitely not undermined by any fed action, but i wanted to get your take on this. if you take a look at my bloomberg right now, i have pulled up a yen chart. the last three days bc that spike in the middle there, where it basically weakend, because there was thought that this may be could work. but of course, strength here, does it mean that traders think boj has pretty much impotent policy? marios: i think you can fill in the blank and just fill it in with the name of any central bank in the world. monetary policy has been the main instrument used by policymakers across the world,
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including japan, to boost economic growth. it has been maxed out, losing potency, and i think that applies to japan very well. i think it is important and quite interesting to see the japanese saying they are willing to overshoot the inflation target. it is exactly what i mentioned with regards to the fed earlier on. why are we focused on 2%? we under shot for such a long time. if we overshoot a little bit, what is the problem with that? i think that is positive to see that from japan. but let us talk about the economic sphere there were supposed to be three arrows. monetary policy, fiscal policy, structural reform. unfortunately, we're only seeing the one arrow being fired constantly. and that is monetary policy. and i agree with you, it is losing potency. and i think we'll not regained all we need to see all three arrows firing at the same time. fiscal policy in japan and across the world will have to
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play a much more active and important role. angie: do your point, even with lower borrowing costs, the bank of japan can force companies here to invest or even boost wages for employees. that is the issue here. marios: it is, but we have seen that despite low interest rates, and in some cases negative interest rates across the world, this has not really worked. we have to relearn a lot of things in this environment. you know, usually the lower the rate the higher the credit growth, the stronger the growth. but once you are near zero interest rate, once you go into negative interest rates, things begin to work slightly different. and there is this perception, this consensus emerging amongst central bankers right now that when you are in negative interest rates credit is not responds. factor that
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it is usually capital flows that respond and currency movements that respond. what you would expect to happen in terms of credit growth, in terms of money supply growth in many parts of the world is not actually happening. yousef: up next, we continue to focus on the relative decision by the fed and the boj, especially how all of it is affecting the emerging market space. stay tuned for that conversation. this is bloomberg. ♪
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yousef: welcome back. you are watching bloomberg. i am yousef gamal el-din. angie: i am angie lau. a quick check of the headlines. caterpillar has reported a 45th straight month of falling machine scales as they scale back global growth. however, asia is a rare bright spot. the company saw a 17% growth last quarter. let america leading with 45% in
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august. asia was the only region to buck the trend, sales rose for the first time since november of 2012. south africa may lose its investment-grade credit rating, that according to diamond producer debeers. the ceo says there is serious danger of a cut and of the government must reassure investors that it is committed to stability. south africa has double strugglo contain public debt. the fight between president zuma and the finance minister for control of the treasury and state owned companies has raised concern. turkey has announced a range of new measures designed to reduce borrowing and consumer spending. the prime minister says the government will increase the maximum maturity on credit card installments to 12, from nine, and allow credit card debt to be restructured. also raising the credit card minimum, the equivalent of
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$1800, which is four times in them away. yousef: global chief economist at standard chartered is still with us. let us take a look at how emerging markets are reacting to both boj and fed decisions. which markets are going to be most vulnerable in the space, in light of the latest commentary? marios: a very important role for sentiment globally, and we model the sensitivities across the emerging-market world last year, and what we found using historical data was that the most sensitive markets in order of sensitivity, first, turkey. second, indonesia. third, brazil. fourth, malaysia. markets are a very general term, the instrument that is the most sensitive to fed shock is usually the currency. so what we expected last year was to see the currency of these economies to be very volatile and very sensitive, and to face
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increasing pressure in anticipation of the fed hike. and indeed, this is what happened last year. so, if the hike is that for the currency, likewise fed staying on hold and not hiking is actually positive for this economy. and gives them room to pursue this policy, and i am sure the turkish central bank would be relieved with the lack of action by the fed, because it gives them room to normalize their own policy. yousef: what do you expect them to do? they have a decision they are making today. this takes the weight off their shoulders. marios: it takes a lot of weight off their shoulders and gives them room to cut the upper bound of the interest rate corridor. and i think they will go ahead with a cut later today. inflation in turkey has also been declining, which also gives them some room for maneuver, but i think beyond that, the room for further cuts for turkey will begin to diminish. the current account is likely to
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widen. also moving higher, in the same time there is some uncertainty regarding the rating agencies as well. yousef: what about the broader emerging market space? where do you see the interesting stories playing out over the next six months? marios: we are expecting low growth, especially when it comes to the mature economy of the west. interest rates are also very low, and in some cases negative. and in this environment, if it happened 20 years ago, you would have expected asia to underperform significantly. it was seen as the high region, very well when the world does well, doing very badly when the world does badly. it is no longer the case. despite the very disappointing global growth, asia is holding up quite well. and within asia, our top pick would be southeast asia region. the countries are outperforming and doing some quite significantly. yousef: always great having you
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on the program. marios from standard chartered. angie: coming up next, i warning from the ua ahead of the opec talks next week. ethis is bloomberg.
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angie: it is 12:30 in hong kong. a beautiful live look at the sister to the ifc, right here on the hong kong side. that is the side. stocks climbing thanks to the fed. just 30 minutes before the afternoon trading kicks off after the lunch break. ♪ the top stories on bloomberg markets: middle east. the asian stocks follow wall cap ratester the fed
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on hold. the regional benchmarks including japan had for a two-week high. fed chair janet yellen said that it has strengthened, cutting the december rate increase. that's part unanimous vote with three of the 12 board members voting for a quarter-point increase. to oil, surging almost 30%, after the largest shareholder korean air agreed to provide emergency fund. the carrier is offering $50 million immediately, and other creditors may get the same. although the government estimates it needs half $1 billion to cover unpaid foue l. beyond rescue. angie: a sustainable solution must be found. it comes ahead of the group meeting in algiers next week. that thetary says
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consultation will be relevant decision-making, but telling isomberg the blanrand pricing stability. it is 12:30 in hong kong. bottom of the hour. i am angie lau. yousef: i am yousef gamal el-din. anna: i am and edwards in london. we are counting down to the start of the european trading day. the very good to see you. about thetell you macro story we will follow in europe. of course, fed will have plenty of analysis. what it means short-term and long-term for the rate analysis. very's assets and the dollar. we will talk about that throughout the day. we have a host of good guests. and we talk about the boj and what it means for european central bank feared with that in mind, we have a central bank decision here in europe today. it is not one of the biggest central banks, not only talk about all the time, but with oil prices where they are it could be interesting. norway's central bank will meet to give us a central bank
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decision. at a survey of economists in that by bloomberg suggests no change in the interest rate. they will keep that main rate at half a percent. we have on of one of numbers yesterday that showed they are the highest in some 20 years in norway. the rate varies though between 3.1% and 5% depending on which measure you look at. and european standards are not that high. look for any comments they have on the oil price. we will also hear from the part of the bank of england, the financial policy committee. they are separate from the mpc, but also part of the bank of england. both are chaired by mark carney. we will hear from them about what they discussed onto the inner meeting. and we could hear about the side effects of lower interest rates in the uk. in the wake of the brexit vote cutting interest rates in the uk, introducing other stemless measures. what is that going to do to the level of borrowing? does that give the bank of
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england's other arm reason to be concerned? they have already cut the buffer required, taking some action, what will they say about the current account deficit and commercial real estate? those to be of interest later on today as well. yousef: anna, sticking with the uk, what is the latest in the brexit conversation? anna: a really fascinating story on the bloomberg today around the banking sector and how it is repairing for change, once we see article 50 trigger. once we get clarity really on the banking sector, how it can operate from london across europe, to what extent it can do that. we have a bit of reporting that suggests that global banks are planning for a loss of euro business in the uk.and that would be quite a substantial thing if it were to happen. executives we understand here at bloomberg expect that france and germany will prevail in this tussle over the clearing of $570 billion of euro derivatives.
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the city of london wants to hold on to that business, could be stripped of the ability to clear euro denominated swap, after formally triggering article 50, release caught up in a conversation. the clearing function, will it be among the first to move? according to these executives a global investment banks, london currently accounts for 39% of the global market. the chancellor in the uk, philip hammond, has been key to pledge support for london and for the status of the financial services sector. this is something that will run. others though point to a less likely scenario, were the business moves out of london into the rest of europe, talk about how this may take many years, very disruptive, might drive up costs for companies. be aware we also have interesting commentary coming up from the federation of small businesses about the concerns of small business. this is brexit on one side for the moment, focusing instead on the threat from higher wages. yousef: thanks, anna.
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let us check in now on the first word headlines around the world. there is paul allen. a second night of protests in charlotte, north carolina has dissented into chaos and violence and one man on life support after being shot. the demonstration came after the fatal police shooting of a black man on tuesday. it was initially largely peaceful, although officers did fire tear gas. a man has been shot by another civilian and was initially reported dead. new filing suggest some of the party's top donors are ignoring donald trump and pouring money into keeping control of the senate. federal election commission documents show casino magnet sheldon adelson gave $20 million last month. 's he was the party biggest donor four years ago. set the beginning the donald trump campaign only $5 million. new analysis from a nonpartisan group found that donald trump's latest tax id would increase the federal debt by $5.3 trillion
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over the next decade. by contrast, hillary clinton's plan would cost $200 billion. when donald trump introduced his economic plan last week, he said his proposed tax cuts would be funded by the economic growth he would create. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. angie: thanks. with less than a week to go until the opec meeting, uae as a warning for oil producers. joining us now our energy reporter,, avenida paolo. minister really cautioning opec against taking any decision in algiers. what is the cause for his concern? >> good morning. that is right. he was taking a cautious tone yesterday. he said that it is not only opec producing the market, but there are other producers out there. now, since opec adopted the
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saudi-led strategy to pump up production, that was in 2014, based on that to try to win back market share, they have been trying to push out higher cost. producers that includes shale from the u.s. we have seen some rigs coming back in the u.s. i think it is one thing the back of opec's mind, they do a cut or a freeze, sorry that have already rolled out a cut, but they do some kind of free the limits production and pushes the price of a little bit, that might be just enough to bring more shale back into the market. that would kind of unwind some of the work they have done, at great cost to their own economy over the last two years. they are being really cautious. they don't want something that would end up hurting them, and helping others. angie: is that caution perceived, the chances for
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reaching a decision next week? anthony: well, as you said earlier in the discussion about some of the headlines about this meeting, the opec secretary-general said it is a consultation meeting. the oil minister from the uae reiterated that yesterday. he is said it is not a decision-making meeting. so the impression we got from him yesterday was that this will be to discuss. he was setting a pretty high bar for reaching a decision. he said if everybody agrees, that is great. we will back it. so, via saying we have to have a decision that is not going to hurt us. he says we have to have a decision that is sustainable in the long-term. everybody hasat to agree. those are the criteria for him to reach any kind of decision. they will saying that be talking about those possibilities next week, not going there to reach an actual decision.
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assuming they have more of an impact on regional pricing with the trading initiatives based around the hub of? >? ? anthony, is the uea trying to position itself to have more of an impact on regional pricing, with the trading initiatives based around the prots over there? we have to apologize there for the technical issues. angie: let us take -- yousef: moving on to a good story, angie. note to you in a second. china's largest producer is said to be raising this month to
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address rising prices globally. david ingle has been following the story. what is going on? >> over the course of the last two years, ping's orders have been for chinese coa, miners to cut output.. it has driven up prices this year, prices up considerably. we have a chart where we can see that newcastle's benchmark coal up about 44% or so this year. also the global index higher by some 60%. they have been limiting supply in china. output in china which is the world's largest producer and consumer of coal is already down 10% this year. they have 150 million metric tons of thermal coal in august, up the lid to almost the entire output of columbia and africa.
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is affectingprices power producers and of course dealmakers in china. we are hearing from a number of people in the chinese industry familiar with the situation saying that 14 chinese miners to raise out this month, by as much as 2.7 9 million metric tons. angie: steve, are they going to get into trouble? aren't there a form to cut overcapacity? steve: that is the biggest concern, why these prices have gone up a little bit too quickly. the government's key customers are the state owned giant power steelmakers. the and they have been complaining the prices of gone up too high because of the output and capacity restrictions that the reforms have laid out. ping has been quite steadfast on that. but again, china's market is all
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about intervention now, according to one analyst. so it looks as though the government is coming in to step in and perhaps have a supply and price balance going for the rest of the year at least. thanks.tephen engle, coming up, the fed refrain from raising rates, but maybe a very different picture for each of. we will preview the upcoming central-bank at the capital, next. this is bloomberg. ♪
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yousef: welcome back. you are watching bloomberg. i am yousef gamal el-din. angie: i am angie lau. first check of the latest flash headline. said to have met for talks this comes just days before the cartel gathers in algiers. sources say they met at opec headquarters in vienna, and the hope of securing a meaningful deal on oil production and
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prices. the countries are fierce rivals, bilateral tensions stubborn and agreements this year. won u.s.oeing has approval to sell planes to iran, 40 years at the last order. negotiating terms for 100 new airplanes, with the 77 of the top the list, worth more than $17 billion. airbus has been given the green light to deal with iran,, although based in europe they needed u.s. approval and at least 10% of the components of american origin. reversed itshas import standards, leaving traders skeptical about doing business with the world's largest buyer. cairo canceled a zero-tolerance policy less than a month after reinstating the ban and rejecting several cargo, by refusing to offer the tender.
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i put together a chart to showcase how the story move the market in the chicago weha futures. ,'ve highlighted that pop in prices as result of the news. it has been very volatile. but it is continuing to weigh on direction overall momentum, in a particular market. let us stay with the egypt story because there is also a central bank decision over there. expect to raise rates to 11-year high. in the attempt to combat rising inflation, let us get some more insight on this story. again, before we go into that, the economist survey by bloomberg said 50 basis points. our senior economist joins us now. how do you expect in the mood
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today? >> three scenarios. one scenario is do nothing. the central banks will only raise by 2.5%. and at this rate, interest rate movements have limited impacts on inflation. ok, the central bank has an inflation target mandate. the second is to raise about 50 basis points to 100, and this is because of the fact that it has an inflation target mandate and it would need to raise rates, but not by a big magnitude given the inflation dynamics. one-off seasonal factors, that sort of thing. the last scenario which we favor and think is going to happen, an increase of anywhere between 100-300 basis points over the next three months, and many on of them are 17th meeting as well. and this is mainly to try and curb inflation, but more so to attract and make egypt more attractive for investors at this point. with the imminent evaluation
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coming up. yousef: that is the other major talking point. we had the valuation earlier in the year. the second one, possibly larger as expected. nothing is certain yet, but what are you looking at? what is a realistic move by the central bank to try to accommodate the stakeholders? >> i think at this point it is very clear from the figures, from anecdotal evidence, from corporate activity that the fx situation is a big overhang. there is no other way other than to devalue, progressively. the counterargument would be the cost of the violation on the economy. because egypt is a net importer of a lot of commodities, food commodities especially. but at this point, we think that having an aggressive devaluation in the next couple weeks, anywhere between days and weeks, is the right thing to do. investorstfolio attracted again to egypt, sdi
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coming in, and the corporate activity back on its feet over the next six months to one year. yousef: again, i look at how some of the asset classes are performing. you know, there is that sense of excitement that you would expect as result of the imf deal, not really reflected in egyptian assets. why do you think that is? deal brought the will to the level that there is commitment from the government's part, especially with the fiscal reforms. talking is back again, to oil investors in different parts of the world. the interest is the again. after people's work butre egypt on the back burner for a while. and the next step is to solve the critical issue, that is devaluation. more fiscal reform and go on to the next level of reform, yousef: the micro level. yousef:the next level, bringing them to track would mean you
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have to bring back the main drivers of egyptian economic growth, that includes tourism, foreign direct investment, all of these have been in the doldrums. how does the egyptian economy get back, so i can put money to work, investors can get attractive yields and a healthier of said environment? >> you have the quick wins, and the balance of payments which will recover graduate league. to make it so attractive that you cannot ignore the lucrative returns that will be made in egypt. currently, one-year bills about 16.5 now. high. andeveral year i think that after devaluation happens it will be very interesting for investors to look at and in the portfolio money back in, which is a key driver the balance of payments at this point, the fastest variable to respond. then, you have tourism figures, arrivals recovering since march.
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we think that uk, russians will be back probably very soon, the next couple of months. there is going to be a gradual recovery in tourism going into 2017, more so as we get into 2018. but that takes time. these variables take time to recover. exports transfers, that sort of thing. it is the quick wisdom. low hanging fruit as we say, the import volume investors. yousef: thanks for coming on the program. our capital senior economist. up, excessng baggage? the former u.s. treasury official says chinese doris may hold the key to capital outflows. details, next. this is bloomberg. ♪
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yousef: welcome back. you are watching bloomberg.
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i am yousef gamal el-din. angie: i am angie lau. china's growing ranks should be using foreign trips to shift to accelerate capital outflows in the country. that is according to a former u.s. treasury official. we have our chinese correspondent tom mackenzie with all the details. what is the evidence that this is actually happening? tom: angie, they come from data that was crunched by the former u.s. treasury official, who suspicions were aroused when he looked at the surge in the money that was being spent overseas by compared to the actual number going abroad. what he looked at was this tourism deficit that china had. we talk about trade deficit. this is a tourism deficit. the amount of money spent by travelers coming here, looking at the for been city in the great wall, minus the amount going abroad.sts
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that it do it or billion u.s. dollars in the 12 months of june, and it compares 77 billion u.s. dollars in 2013. no of course a number going to china has increased around 120 million in 2015. compared to around 98 million in 20 13. and that 22 million increase does not really account fully for this huge surge in overspending, he suggests and a suspicious that possibly a quite likely is that tourists are packing more than luggage than just cameras and cream on the jump to a flight from london, paris, sydney. yousef: tom, this might take a while to answer. why are they buying this with all the cash? yousef, i will try to keep
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it quick. property at the top of the list. they remain relatively high. life insurance products in hong kong. that has been favored by many business leaders. and also just opening debit accounts or positive accounts in countries abroad to get cash over there. this could be good for the global economy if they are actually spending things on products, consumers products and services. instead of just whirling them away into financial products and bank accounts, doing is no good at all in terms of the global economy. of course, this has correlated with the depreciation of the yuan. we assume the government put capital controls in place, pretty after 2015 when capital controls really spike towards the end of the year. it is more difficult to get money out. but it triggers the authority to monitor all of these people leaving, putting a couple of wads in the carry-on luggage and their travel guide. angie? there inm mackenzie
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beijing. thank you so much. that is it for us on bloomberg markets: middle east. yousef: anna edwards will have all of the top stories from london. "countdown" is next.
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. . anna: standing firm. janet yellen rebuffs pressure to hike. there is a sense from three fomc members. the first time this is happened in two years. the dollar weakens following the decision. we will have the latest market news. putting the brakes on rumors that apple is looking to buy a stake in the supercar maker. and why executives in london expect the uk's to lose its hundred $70 billion euro clearing business after briggs it. -- brexit.

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